Dal Board decides not to divest fossil fuel endowment holdings

In front of a packed house at Tuesday’s meeting, the Dalhousie Board of Governors accepted the recommendation of its Investment Committee to not divest the university’s holdings in companies with substantial carbon assets.

Since earlier this year, the Investment Committee has been considering the merits of fossil fuel divestment, a review spurred by the advocacy group Divest Dal. The students and community members of Divest Dal have been lobbying the university to divest — in other words, to remove from its endowment investments — any holdings from a list of 200 publicly traded companies judged to hold substantial carbon assets.

Divestment movements have become prominent on university campuses in recent years, though as of yet no Canadian university or college has proceeded with divestment of its fossil fuel endowment holdings. Divest Dal has been pushing for Dalhousie to become the first to do so.

Dal’s endowment is made up of more than 1,300 financial gifts to the university, totalling more than $485 million. Just over half of the endowment is used for student bursaries and scholarships, with 30 per cent focused on research and academic appointments and the remainder for libraries and general support of the university. In an interim report published in October, the Board identified that Dalhousie’s portfolio held investments in 35 of Divest Dal’s list of 200 companies, totalling $20.3 million — approximately 4.3 per cent of the university’s endowment investments.

Making a decision

Following October’s interim report, and several submissions and presentations from Divest Dal for consideration, the Investment Committee delivered a final report at Tuesday’s Board meeting that underscored the importance of both the divestment discussion and the broader issue of climate change. The Investment Committee concluded, however, that it did not believe divestment would advance the goal of reduced carbon usage, a conclusion embraced by the Board through its vote.

“The Board applauds the effort and thoughtfulness that went into producing the Divest Dal reports, and endorses its goal of reducing GHG emissions,” said Board Chair Lawrence Stordy in a statement published following the decision. “However, we are not convinced that divestment will help achieve these goals.”

The Board also voted to support the report’s recommendations for two initiatives resulting from the review: investigating ways of allowing new donors to direct their endowments to environmentally sustainable fund options if they so choose, and to improve transparency and openness by reporting annually on all holdings in publicly traded companies.

An additional motion was proposed for a further investigation of the potential impact of divestment on the university’s stakeholders, including research funders, investors, faculty and students. However, the Board voted against pursuing such a review at this time.

Report highlights

The Investment Committee’s full report, available on the Board’s website, outlines the reasoning for the decision, with three factors highlighted. One is that divesting of Dal’s relatively small holdings in the listed companies would have little to no impact on climate change itself — a sentiment shared, in many respects, by Divest Dal, who advocated more in favour of the symbolism of the university’s divestment than its immediate tangible impact.

The second key part of the committee’s recommendation is a belief the university can have a greater impact on companies’ carbon and climate change policies and initiatives as an engaged investor, rather than through one-time divestment. The report also argues that such collaboration is more in the spirit of the university’s mission, whereas divesting may pose consequences for Dal researchers and students who engage with carbon-holding companies, including those companies making efforts to reduce their carbon usage.

The third reason for decision in the report involves the logistics of divesting: the university would need to leave the large pooled investments that constitute 80 per cent of its endowment. The report argues that leaving those pooled funds would have negative consequences for the university’s endowment: a less diverse portfolio, increased transaction costs (upwards of $1 million a year or more) and losing access to professional fund managers who continually assess and evaluate the merits and risks of Dal’s holdings.

Considering the issue

Speaking to Dal News about the decision, George McLellan, vice-chair of the Board and chair of the Investment Committee, expressed the committee’s view that Dalhousie’s own sustainability initiatives — citing $45 million in investments in recent years — and its ongoing research and education programs represent better and more effective ways for the university to contribute to reducing carbon usage and greenhouse gas emissions.

“What I hope people take away from the report is that Dalhousie and its Board are as serious as anybody about the issues confronting us in terms of climate change,” he said. “But the question is: what’s the appropriate way to engage those issues? We agree with Divest Dal on their end goal, but not on this particular means to achieve it.”

McLellan said the discussion has been a valuable one, and that despite disagreement over divestment itself, he feels the Investment Committee’s other recommendations — continuing Dal’s commitment to work with fund managers to employ ESG [environment, social and governance] investment factors, greater transparency, investigating an environmentally sustainable fund for donors — reflect values shared by both the Board and Divest Dal.

“Divest Dal has presented admirably to our committee, and their information has been very helpful and will shape a lot of our thinking moving forward — as it should,” he said.

A campus debate

Members of Divest Dal, many of who filled the available seats in University Hall and flowed outside into the Studley quad, reacted with disappointment to the vote.

Divest Dal spokesperson and recent Environment, Sustainability and Society and Political Science graduate Emi Belliveau expressed the group’s view that universities need to do everything within their capacity to combat climate change — including divesting from carbon-holding companies.

"It comes back to the moral imperative that, as an institution invested in the fossil fuel industry, we are actively investing in the destruction of the climate and that is unethical,” said Belliveau in an interview in advance of the Board meeting. “Choosing not to divest is not avoiding the issue; it's remaining part of the problem."

She says the enthusiasm of Divest Dal’s members has been key to putting the issue on the university’s radar: “[Our] approach to pushing for divestment has not just been to engage the administration but to create a community of people working on this issue… it’s a reflection of the community that we want to build and the sustainable future we want to see.”

Though the majority of observers in the room were Divest Dal supporters, there were opposing voices as well that reflected some of the debate within the Dal community. Divestment was a topic of lengthy discussion at Monday’s Senate meeting, and a group of alumni, faculty and students from Dal’s Department of Earth Sciences organized in opposition to the divestment proposal.

“If Dalhousie chooses divestment, then they choose non-participation in the conversation about energy,” said MSc Earth Sciences student Carla Dickson, who spoke at the Board meeting about how she felt divestment would send a negative signal about the work of students and faculty in her field who collaborate in all aspects of the energy sector.

“Divestment by Dalhousie University will inevitably lead to a steady decline in funding for research and programs in many Facilities, and a commensurate decline in career opportunities for our graduates. Divest Dal will work in both directions; energy companies will distance and divest from Dalhousie as well.”

Looking ahead

“Although [the vote is] disappointing, Divest Dal has just been given a new breath of life,” said Divest Dal’s Belliveau following the decision. “We’ll be continuing to grow and are looking forward to the opportunity to use new avenues to communicate with the Board of Governors and the Dal community about the importance of divestment, and continuing to grow this campaign.”

Investment Committee Chair McLellan says he encourages discussion and engagement around Dal’s investments, but hopes the discussion is considerate towards the different perspectives on the issue.

“We have to respect all sides of this,” he said. “We respect and appreciate the questions Divest Dal has asked, the proposal they put to us and, particularly, the information they’ve brought to the discussion. But we also have to respect some of the complexities of this issue that our report identifies. At this point, considering all the impacts — positive and negative — on balance we don’t feel that pursuing divestment is the right approach for the university to make an impact in confronting climate change.”

Read the Board's decision

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